PARIS – When the International Monetary Fund lowered its global growth forecast for 2014 and 2015 from 3.7% and 3.9%, respectively, to 3.3% and 3.8%, it cited the eurozone’s increasingly gloomy prospects, including significantly slower growth in Germany, as a leading cause. After all, the eurozone still accounts for about 13% of world output at market prices – about the same as China.
Europe’s economic struggles are reflected in its political situation, with many European electorates now mired in a sense of hopelessness and sliding toward ideological extremes. But a forthcoming report by two highly respected economists – Jean Pisani-Ferry, the French government’s Commissioner-General for Policy Planning, and Henrik Enderlein, a key leader of a reformist group of German economists – will propose a way forward.
The task facing Pisani-Ferry and Enderlein is to create a new reform strategy for Europe’s two largest economies, focusing on structural reforms in France and increased investment in Germany. The hope is that the report, which will be made public on December 1, will provide a breakthrough that can revive, at long last, the eurozone’s growth engine.
The paper was commissioned a few days after the IMF’s Annual Meetings last month, at a gathering of the French finance and economy ministers, Michel Sapin and Emmanuel Macron, and their German counterparts, Wolfgang Schäuble and Sigmar Gabriel. Though the meeting produced no concrete policy action – as the French daily Le Monde put it, “nothing was asked for, and nothing was obtained” – it could signal the beginning of more effective Franco-German cooperation, guided by the Pisani-Ferry/Enderlein report.